Thursday Watch

Night Trading 

• Asian equity indices are -.75% to +.25% on average. 
• Asia Ex-Japan Investment Grade CDS Index 70.0 unch. 
• China Sovereign CDS 35.5 +.5 basis point.
• China Iron Ore Spot 93.20 USD/Metric Tonne -.3%. 
• Crude Oil 90.09/bbl. -.4%. 
• Gold 4,190.50 USD/t oz. +.1%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.04 -.10%.
• Bloomberg Emerging Markets Currency Index 33.74 -.03%.
• Bloomberg Global Risk-On/Risk Off Index 136.9 +.6%.
• US 10-Year Yield 5.29% +1.0 basis point.
• Japan 30-Year Yield 4.19% +4.0 basis points.
• Volatility Index(VIX) futures 17.8 -.4%.
• Euro Stoxx 50 futures -.59%. 
• S&P 500 futures +.30%.
• NASDAQ 100 futures +.32%.

Morning Preview Links

BOTTOM LINE: Asian indices are mostly lower, weighed down by utility and financial shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 75% net long heading into the day.

Stocks Modestly Higher into Final Hour on Earnings Outlook Optimism, Quarter-End Window-Dressing, Short-Covering, Tech/Energy Sector Strength

Economic/Market Gauges:

• North American Investment Grade CDS Index 59.5 +.5% 
• BofA Private Credit Proxy Index 69.3 -1.1% 
• Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .46 unch.
• BofA Global Financial Stress Indicator .01 +1.0 basis point
• European Financial Sector CDS Index 69.3 +1.3% 
• Emerging Market CDS Index 159.2 +1.3% 
• Israel Sovereign CDS 61.0 +.7% 
• Bloomberg Global Trade Policy Uncertainty Index 1.3 unch.
• US Morning Consult Daily Consume Sentiment Index 86.8 -.7

• Citi US Economic Surprise Index 46.9 +7.6

• Citi Eurozone Economic Surprise Index 73.3 -2.8

• Citi Emerging Markets Economic Surprise Index 16.1 -1.9
• S&P 500 Current Quarter EPS Growth Rate YoY(12 of 500 reporting) +14.6% +.3 percentage point
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 404.51 +.18:  Growth Rate +23.3% +.1 percentage point, P/E 19.1 +.2
• S&P 500 Current Year Estimated Profit Margin 16.29% unch.
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) n/a
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 1,055.44 +1.08: Growth Rate +57.2% +.2 percentage point, P/E 18.3 +.2
• Bloomberg US Financial Conditions Index 1.03 -4.0 basis points
• US Yield Curve 40.75 basis points (2s/10s) +5.0 basis points
• Bloomberg Industrial Metal Index 176.7 -.5%
• Dutch TTF Nat Gas(European benchmark) 72.2 euros/megawatt-hour +4.0%
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 8.4% +.4 percentage point
• US Atlanta Fed GDPNow Q3 Forecast +3.7% -130.0 basis points
• US 10-Year T-Note Yield 5.29% +6.0 basis points
• 1-Year TIPS Spread 2.68 +14.0 basis points

• Highest target rate probability for Dec. 9th FOMC meeting: 58.5% (+9.1 percentage points) chance of 4.0%-4.25%. Highest target rate probability for Jan. 27th meeting: 46.0%(-.2 percentage point) chance of 4.25%-4.5%. (current target rate is 3.75-4.0%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +502 open in Japan 
• China A50 Futures: Indicating -123 open in China
• KOSPI 200 Futures: Indicating -5 open in South Korea 

• DAX Futures: Indicating +91 open in Germany

Portfolio:

• Higher: On gains in my biotech/energy/tech sector longs and emerging market shorts
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges
• Market Exposure: Moved to 50% net long

Bear Radar

Style Underperformer:

• Small-Cap Value -.3%

Sector Underperformers:

• 1) Airlines -1.8% 2) Gold & Silver -.9% 3) Insurance -.9%

Stocks Falling on Unusual Volume: 

• TLK, HOOD, FICO, CAG, MAT, AIR, RDN, PEBO, KMX, NLY, ADIG, CBRS, IPX, NMIH, JBL, ETON, TRLV, SCTX and LQDA

Stocks With Unusual Put Option Activity:

• 1) UAA 2) MMED 3) JBL 4) EQT 5) CBRG

Stocks With Most Negative News Mentions:

• 1) AVXL 2) INV 3) PZZA 4) APP 5) MRNA

Sector ETFs With Most Negative Money Flow:

• 1) ARKK 2) PPA 3) XLF 4) XLE 5) DRAM

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Large-Cap Growth +.8%

Sector Outperformers:

• 1) Cyber Security +1.7% 2) Software +1.7% 3) Space +1.3%

Stocks Rising on Unusual Volume:

• CTNM, ROG, UTHR, SWMR, CDNL, SGMT, DNA, FORM, EVER, ALMR, ACMR, GEN, ELMT, ABSI, CLPT, SYRE, USDE, TRMD, ADEA, DBVT, SMMT, HIMNS, HPE, XP, TWST, SDGR, CBOE, MDB, ENTA, SNPS, GME, VKTX, PLNT, NAMS, SNOW, RMIX, FDS, GRAL, FPI and HII

Stocks With Unusual Call Option Activity:

• 1) PACB 2) BEKE 3) KNX 4) TLN 5) JBL 

Stocks With Most Positive News Mentions:

• 1) HPE 2) BMR 3) UTHR 4) ROG 5) CAPR

Sector ETFs With Most Positive Money Flow:

• 1) IBB 2) SOXX 3) XLU 4) FTXN 5) XLV

Charts: 

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume

Tomorrow's Earnings/Economic Releases of Note; Market Movers

Earnings of Note 
Company/Estimate 

Before the Open:

• (ACN)/3.18
• (AYI)/5.57
• (MKC)/.76 

After the Close: 

• (NKE)/.44

Economic Releases 

5:30 am EST

• Challenger Job Cuts YoY for Sept. 

8:30 am EST

• Initial Jobless Claims for last week is estimated to rise to 200K versus 197K the prior week.
• Continuing Claims is estimated to rise to 1725K versus 1719K prior. 

10:00 am EST

• ISM Manufacturing for Sept. is estimated to rise to 55.0 versus 54.6 in Aug.
• ISM Prices Paid for Sept. is estimated to rise to 73.0 versus 71.1 in Aug.
• Construction Spending MoM for Aug. is estimated unch. versus a -.5% decline in July. 

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Cook speaking, Fed's Williams speaking, Fed's Bowman speaking, Fed's Jefferson speaking, Fed's Waller speaking, Fed's Collins, Fed's Logan speaking, Fed's Barkin speaking, Fed's Schmid speaking, Atlanta Fed GDPNow Q3 update, weekly EIA natural gas inventory report and the Fed's weekly balance sheet report could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Afternoon Market Internals

NYSE Composite Index:

• Volume Running -2.9% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 15.3 +3.0
• 5 Sectors Rising, 6 Sectors Declining
• 43.8% of Issues Advancing, 54.7% Declining 
• TRIN/Arms .88 +3.5%
• Non-Block Money Flow +$34.9M
  
• 18 New 52-Week Highs, 241 New Lows
• 37.9% (-3.5%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 33.1 -.3

Polymarket: 

• Will China invade Taiwan by June 30th 2027? 8.0% unch.
• Strait of Hormuz traffic returns to normal by October 31st 4.0% unch.
• Iran agrees to end enrichment of uranium by Dec. 31st 10.0% unch.
• Israel withdraws from Lebanon by December 31st 4.0% -1.0 percentage point
• US Invades Iran before 2027 14.0% -1.0 percentage point
• US announces end of Iranian blockade by October 31st 30.0% unch.

Other

• Bloomberg Global Risk-On/Risk-Off Index 137.0 +.6%
• Global Monitor Iran Instability Index 63.0 +3.0
• Strait of Hormuz Oil Tanker Traffic Curtailed Estimate 40.0% -20.0 percentage points
• US High-Yield Tech Sector OAS Index 443.0 +1.0 basis point
• Bloomberg Cyclicals/Defensives Index 271.5 +.6%
• Morgan Stanley Growth vs Value Index 153.6 -.4%
• CNN Fear & Greed Index 35.0 (FEAR) +3.0
• 1-Day Vix 10.1 -14.0%
• Vix 15.8 -1.3%
• Total Put/Call .81 -5.8%

Wednesday Watch

Around X:

• @Business

• All US children under 18 could be automatically enrolled in Trump Accounts under a proposed Treasury Department rule that would dramatically expand the reach of one of the president’s signature initiatives. 
• A White House plan to cut hundreds of millions of dollars in federal funding approved by Congress using a controversial budgeting maneuver faces a legal challenge on the eve of the end of the fiscal year, when the money is set to expire.
• Bain is among the bidders looking to acquire a data center company owned by Koch, a deal that would mark an about-face for the private equity firm that has sat on the sidelines of the US artificial intelligence infrastructure boom.
• President Donald Trump is set to unveil South Korea’s plan to invest some $200 billion in the US, including $54 billion for a long-stalled venture to export natural gas from Alaska.
• Key OPEC+ members are likely to stick with a plan to hold crude production quotas steady for next month when they meet this weekend, according to two delegates.
• The US is further restricting travel to Cuba and barring banks from working with the island’s nascent private sector, as Donald Trump presses to end nearly seven decades of one-party rule.
• Hundreds of mom-and-pop investors lost more than $15 million in crypto and cash in fake AI stock trading schemes fueled by boosters in WhatsApp group chats, the Securities and Exchange Commission said Tuesday.
• Federal Reserve Governor Michael Barr on Tuesday repeated a warning that further interest-rate increases will likely be needed to slow inflation.     

• @ZeroHedge

• Boston Mayor Michelle Wu Paying Illegals $575 To Become 'Organizers'... And US-Born Residents Are Excluded. 
• Hegseth To Cut Top Generals, Admirals 'By 20%' Amid Ongoing Pentagon Shakeup.            
• 87 Foreign Cruise Ship Employees Removed For Possession Of Child Abuse Material. 
• California Governor Vetoes DUI Bill Redefining 'Drive' To Include Using Autopilot Under The Influence.
• US-IRAN TALKS YIELD LITTLE PROGRESS THIS WEEK: AXIOS. But… but… you reported…
• Waste Of The Day: Trips To Tiki Bar, Nightclubs.
• Mystery Explosions: Syria's Recovering Gas Network Keeps Getting Sabotaged.
• Huge reversal in rate hike odds today: following John Williams' dovish comments that there is no "urgency" to act, odds of a rate hike tumbled from 68% to 44%, with no hike nearly doubling to 56%. It appears UBS will be correct that there will be no rate hike before midterms.
• Texas Governor Declares Disaster Over Soaring Diesel Prices.
• *TRUMP WARMS TO JAY CLAYTON AS AI CZAR: AXIOS.
• Over the past month, the S&P is unchanged, the median stock is 5% lower, while Semiconductors are 10% higher.
• Number of stocks above 200DMA plunging below 50%, lowest in 6 months. The last time that happened was after the Iran war sparked a market rout.
• The Industrialization Of Fraud: How Global Scam Farms Are Evolving To Target Your Wealth.
• 'Doves' Drive Oil & Rate-Hike Odds Down; Dollar & Gold Bid Ahead Of Macro/Micro Maelstrom.                                   

• @CNBC  

• Wednesday's big stock stories: What’s likely to move the market in the next trading session.
• Hedge funds now hold a record share of the $30 trillion Treasury market. What could go wrong?
• Stock futures inch higher as traders weather latest rise in Treasury yields: Live updates.

Night Trading 

• Asian equity indices are +.25% to +1.25% on average. 
• Asia Ex-Japan Investment Grade CDS Index 70.0 -.5 basis point. 
• China Sovereign CDS 35.0 unch.
• China Iron Ore Spot 94.10 USD/Metric Tonne +.6%. 
• Crude Oil 89.55/bbl. +.2%. 
• Gold 4,203.0 USD/t oz. +.6%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.05 -.05%.
• Bloomberg Emerging Markets Currency Index 33.72 -.05%.
• Bloomberg Global Risk-On/Risk Off Index 137.2 +.7%.
• US 10-Year Yield 5.23% -1.0 basis point.
• Japan 30-Year Yield 4.19% +1.0 basis point.
• Volatility Index(VIX) futures 17.6 -.4%.
• Euro Stoxx 50 futures +.52%. 
• S&P 500 futures +.17%.
• NASDAQ 100 futures +.09%.

Morning Preview Links

BOTTOM LINE: Asian indices are modestly higher, boosted by technology and defense shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 75% net long heading into the day.

Stocks Slightly Lower into Final Hour on Rising Long-Term Rates, Mideast War-Induced Inflation Fears, Technical Selling, Regional Bank/Commodity Sector Weakness

Economic/Market Gauges:

• North American Investment Grade CDS Index 59.75 +.3% 
• BofA Private Credit Proxy Index 69.8 +.7% 
• Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .46 +8.0 basis points
• BofA Global Financial Stress Indicator .00 +5.0 basis points
• European Financial Sector CDS Index 68.4 +1.9% 
• Emerging Market CDS Index 156.6 +.4% 
• Israel Sovereign CDS 60.6 +.1% 
• Bloomberg Global Trade Policy Uncertainty Index 1.3 unch.
• US Morning Consult Daily Consume Sentiment Index 87.5 +2.6

• Citi US Economic Surprise Index 39.3 -7.0

• Citi Eurozone Economic Surprise Index 76.1 -3.5

• Citi Emerging Markets Economic Surprise Index 18.0 -.4
• S&P 500 Current Quarter EPS Growth Rate YoY(10 of 500 reporting) +14.3% -1.6 percentage points
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 404.33 +.36:  Growth Rate +23.2% +.1 percentage point, P/E 18.9 -.1
• S&P 500 Current Year Estimated Profit Margin 16.29% +1.0 basis point
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) n/a
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 1,054.36 +2.26: Growth Rate +57.0% +.3 percentage point, P/E 18.1 unch.
• Bloomberg US Financial Conditions Index 1.07 -15.0 basis points
• US Yield Curve 36.75 basis points (2s/10s) +6.5 basis points
• Bloomberg Industrial Metal Index 177.6 -.6%
• Dutch TTF Nat Gas(European benchmark) 69.8 euros/megawatt-hour -5.0%
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 8.0% unch.
• US Atlanta Fed GDPNow Q3 Forecast +5.0% unch.
• US 10-Year T-Note Yield 5.26% +2.0 basis points
• 1-Year TIPS Spread 2.53 -2.0 basis points

• Highest target rate probability for Dec. 9th FOMC meeting: 58.3% (+12.7 percentage points) chance of 4.0%-4.25%. Highest target rate probability for Jan. 27th meeting: 46.2%(-.2 percentage point) chance of 4.25%-4.5%. (current target rate is 3.75-4.0%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -160 open in Japan 
• China A50 Futures: Indicating -96 open in China
• KOSPI 200 Futures: Indicating +18 open in South Korea 

• DAX Futures: Indicating +198 open in Germany

Portfolio:

• Higher: On gains in my biotech/industrial/tech sector longs, index hedges and emerging market shorts
• Disclosed Trades: None
• Market Exposure: 50% net long

Bear Radar

Style Underperformer:

• Small-Cap Value -.7%

Sector Underperformers:

• 1) Oil Service -1.9% 2) Steel -1.9% 3) Gambling -1.8%

Stocks Falling on Unusual Volume: 

• TLX, MLM, MP, DIN, COLL, TCOM, FMS, VKTX, BGC, FUN, BUD, WS, URI, WS, FRVO, LI, EFX, FA, DKNG, WLK, NEOG, AXSM, MNDY, AIR, SECZ, IMMX, NESR, WGS, MAAS, CLPT, FICO and QURE

Stocks With Unusual Put Option Activity:

• 1) IOVA 2) QURE 3) LW 4) SECZ 5) CNQ

Stocks With Most Negative News Mentions:

• 1) FICO 2) QURE 3) INV 4) BBNX 5) DVLT

Sector ETFs With Most Negative Money Flow:

• 1) SOXX 2) KRE 3) XLE 4) XLK 5) QTEC

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume